Tag Archives: family business policies

05/17/19

Working On Succession Planning

The term “working on your business” may not be new to you. The idea of working on your business pertains to doing the work of creating a business that is sustainable and functions independently of you. One in which the day-to-day operations are managed by the systems and processes you established, and the people you developed to implement them. A business that runs on systems and processes, rather than on your daily efforts, allows you to focus your time and energy on challenges and opportunities that arise for innovation and growth.

We all have the same 24 hours a day and 7 days a week to accomplish our tasks. Without systems, and people trained to manage those systems, we business owners have basically created a tireless job for ourselves. Without a conscious effort to change this situation, the business will likely remain as it is, without significant growth.

Succession planning can be thought of as analogous to working on one’s business. Family businesses consist of systems within systems; the family, the shareholders, and the business itself. Rather than on processes, these systems thrive on policies.

Similar to how systems and processes help your business grow, policies that effectively govern family members, shareholders and the business itself make it more likely that your family and business will continue to grow into the far future. Unless you work on developing these policies, your chances for a successful succession and multi-generational survival are threatened.

Like the conscious effort required to establish a sustainable firm, for a family-business leader committed to creating multi-generational stability a conscious effort is required.

04/20/18

Employment Policies In Family Business

In all social structures, policies provide a process for aligning an organization’s values with its actions. In family enterprises, where there is an overlap of family, business management, and ownership, a family-employment policy is one of more important policies a family can develop.

It can be difficult for family business owners to be objective about hiring—and firing—family members. The family-employment policy helps by providing an established process and procedure for hiring family members. It outlines the factors necessary for employment, and when applied consistently, helps family members understand their relationship to the business.

“The policy is intended to avoid conflict, and should focus on what is best for the company and should stay consistent for family and non-family members[1].” It sends a message that employment with the company is not a birthright–it must be earned.

For instance, the policy may specify that a family member must have gained experience and earned a promotion in an outside firm; achieved a certain educational level; be a good fit within the company, and have skills commensurate with the current market salary for a legitimate job opening.

The policy may also include a statement of philosophy such as: “We are a family committed to our members and descendants being responsible, productive, well-educated citizens who practice the work ethic and make constructive contributions in the local community and the world at large”[2], thereby reinforcing family values.

While all families are different, it’s clear that development of a family employment policy is dependent upon good communication among family members and between generations.

[1] Family Business Wiki. http://www.familybusinesswiki.org/Family+business+Policies

[2] Bork, David. 1991. https://www.aspenfamilybusiness.com/PDF/Sample_docs/Employment_Policy_Form.pdf